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Former Jerusalem mayor Uri Lupolianski was arrested Wednesday on suspicion of accepting more than NIS 3 million (approximately $750,000) in bribes during the construction of the contentious Holyland project in the capital.

Lupolianski, who served as deputy mayor under Ehud Olmert before being voted mayor, rejected the allegations against him, saying that "this was 20 years ago, I don't know why everyone suddenly remembers now. A deputy mayor has no responsibility, it's merely a title, so that it will be nice for him."

Speaking to Channel 10 news, Lupolianski added that "the mayor is the one who decides, he is the one who chooses the path."

It is suspected that in return for bribes, Lupolianski acquiesced to the requests of the project's initiators, and rejected hundreds of objections to the plan, among them preventing height restrictions on the buildings by two stories.

Lupolianski is also suspected of having accepted NIS 1.5 million by 1999, while serving a senior official in the city council and prior to his appointment as mayor. He is suspected of accepting another NIS 1.4 million between 2000 and 2006, as well as some $30,000 for campaigning during his run to succeed Ehud Olmert as mayor in 2003.

In 2005, he is alleged to have accepted a further NIS 100,000 for the same purpose.

Earlier Wednesday, the spokesman for Olmert said that the former prime minister had decided to return to Israel early from his stay abroad, since he is wanted for questioning regarding the alleged Holyland investigation.

Olmert's spokesperson, Amir Dan, said in a statement that "in light of recent announcements that are getting more and more frequent, the police are interested in questioning Olmert regarding his alleged involvement in the Holyland affair. Olmert has decided to cut short his pre-planned visit abroad, and return to Israel on Wednesday night."

The statement also said that "Olmert denies any involvement in the affair, though he clearly said a week ago that he will agree to be questioned if the police wished to do so, so that is the reason for his return to Israel."

"We have all seen how big headlines change over time when people start realizing the real facts," the statement added.

The allegations involve bribes paid to obtain permits for a number of real estate projects, one of which has been identified as the highly controversial "Holyland" residence project in Jerusalem. The project, built on the site of the Holyland Hotel despite large-scale public protests, was begun during Olmert's decade-long tenure as mayor of Jerusalem, and was completed during Lupolianski's subsequent tenure.